Trends and Drivers of Bilateral FDI Flows in Developing Asia

Rabin Hattari and Ramkishen Rajan
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Rabin Hattari: George Mason University

No 112008, Working Papers from Hong Kong Institute for Monetary Research

Abstract: Developing countries are rapidly emerging as new and important sources of foreign direct investment (FDI) to other developing countries. While Asian companies have become significant foreign direct investors abroad, a large share of outward investments from Asia appears to have been recycled intraregionally. However, unlike trade flows, there has been little to no detailed examination of FDI flows between Asian economies at a bilateral level. This paper uses bilateral FDI flows data to investigate trends and patterns of intra-Asian FDI flows over the period 1990 to 2005. It also employs an augmented gravity model framework to examine the main determinants of intra-Asian FDI flows. A range of drivers of FDI flows, including transactional and informational distance (proxied by distance), real sector variables, financial variables and institutional quality are examined.

Keywords: Developing Asia; Distance; Foreign direct investment (FDI); Institutions; Intra-regional; Gravity model (search for similar items in EconPapers)
JEL-codes: F21 F23 F36 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2008-11
New Economics Papers: this item is included in nep-dev, nep-int, nep-opm and nep-sea
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Citations: View citations in EconPapers (14)

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